In the escalating battle between the administration and the judiciary, a federal appeals court apparently is calling the president’s bluff — ordering the Justice Department to answer by Thursday whether the Obama Administration believes that the courts have the right to strike down a federal law, according to a lawyer who was in the courtroom.

The order, by a three-judge panel of the U.S. Court of Appeals for the 5th Circuit, appears to be in direct response to the president’s comments yesterday about the Supreme Court’s review of the health care law. . . .

The panel ordered the Justice Department to submit a three-page, single-spaced letter by noon Thursday addressing whether the Executive Branch believes courts have such power, the lawyer said.

The panel is hearing a separate challenge to the health care law by physician-owned hospitals. The issue arose when a lawyer for the Justice Department began arguing before the judges. Appeals Court Judge Jerry Smith immediately interrupted, asking if DOJ agreed that the judiciary could strike down an unconstitutional law.

The DOJ lawyer, Dana Lydia Kaersvang, answered yes — and mentioned Marbury v. Madison, the landmark case that firmly established the principle of judicial review more than 200 years ago, according to the lawyer in the courtroom.

Smith then became “very stern,” the source said, telling the lawyers arguing the case it was not clear to “many of us” whether the president believes such a right exists. The other two judges on the panel, Emilio Garza and Leslie Southwick–both Republican appointees–remained silent, the source said.

Smith, a Reagan appointee, went on to say that comments from the president and others in the Executive Branch indicate they believe judges don’t have the power to review laws and strike those that are unconstitutional, specifically referencing Mr. Obama’s comments yesterday about judges being an “unelected group of people.”

I believe the written order is here (thanks to reader Jason Walta for the image). The assignment was given orally, so it is not written into the written order. The oral argument hasn’t been posted yet, but when it becomes available, it will be here.

If this story turns out to be accurate, it strikes me as extraordinarily embarrassing to the federal judiciary. But I want to hear the oral argument audio first, or at least get some more confirmation as to what happened, before reaching a firm conclusion.

MR. SINGLETON: Mr. President, you said yesterday that it would be unprecedented for a Supreme Court to overturn laws passed by an elected Congress. But that is exactly what the Court has done during its entire existence. If the Court were to overturn individual mandate, what would you do, or propose to do, for the 30 million people who wouldn’t have health care after that ruling?

THE PRESIDENT: Well, first of all, let me be very specific. We have not seen a Court overturn a law that was passed by Congress on a economic issue, like health care, that I think most people would clearly consider commerce — a law like that has not been overturned at least since Lochner. Right? So we’re going back to the ’30s, pre New Deal.

And the point I was making is that the Supreme Court is the final say on our Constitution and our laws, and all of us have to respect it, but it’s precisely because of that extraordinary power that the Court has traditionally exercised significant restraint and deference to our duly elected legislature, our Congress. And so the burden is on those who would overturn a law like this.

Given that this seems to answer the panel’s questions, I would think it provides a change of circumstances justifying withdrawal of the order, however justified or unjustified it may be.

ANOTHER UPDATE: Having heard the audio, the tone of the questions was quite different from what I was expecting based on the story. It came off to me as earnest and genuine, not just an effort to score a cheap political point. With that said, the order still strikes me as highly inappropriate: The DOJ lawyer was quite clear as to DOJ’s position, and lower court judges deciding cases based on briefing and argument should not be going outside the record to come up with assignments to litigants based on press releases by politicians in such politically charged matters. It just makes the judges look like political actors themselves, which doesn’t help anyone.